Equity
The part of a property's value you own outright: its market value minus what you owe on loans against it. Equity grows as you pay down the loan and as the property gains value.
Also called: home equity, ownership stake
Related terms
The amount you borrowed, or the part of it you still owe. Each payment covers interest first, and the rest pays down principal, which builds equity.
An increase in a property's value over time from market growth or improvements. It is not guaranteed and is realized only when you sell or refinance.
The loan amount divided by the property's value or price, whichever is lower, as a percentage. Lower LTV means less risk for the lender and often better pricing; above 80% usually triggers mortgage insurance on conventional loans.
A revolving credit line secured by your home, which you can draw on and repay as needed. Rates are usually variable, and it typically sits behind the first mortgage as a second lien.
A refinance where the new loan is larger than what you owe, and you receive the difference in cash. It turns home equity into money but raises your balance and resets the loan.
The price a home would likely sell for between a willing buyer and seller, both informed and not under pressure. Appraisals and CMAs both try to estimate it.